. What are official reserve transactions


Explain their importance in the balance of payments.

Best Answer

Explanation: 

  • Transactions carried out by the monetary authority of a country that changes official

reserves are known as official reserve transactions or ORT. 

  • Transactions include the purchase and sale of currency in the exchange market for

other assets and foreign currencies.

  • The transactions of the central bank which cause an impact on the foreign currency reserve of an

economy are called official reserve transactions.

  • Official reserve transactions are essential in the balance of payments because they manage the sale

and purchase of money in the foreign market. 

Final Answer:

India Reserve Bank of India has official reserve transactions.

All kinds of the foreign commerce of currency deal in official reserve transactions show in the balance of payments.

 

 

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